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UK taxpayer banking stakes back in focus

UK Financial Investment, the body created by the UK government to look after taxpayer stakes in Lloyds bank and Royal Bank of Scotland, has today issued figures which suggest the holding of Lloyds bank shares is now in profit by about one pence per share. However, many believe this is a slightly misleading situation because the cost figure of 63.2 pence a share includes a £2.5 billion charge received by the government when the company opted out of the asset protection scheme - not strictly speaking anything to do with the various share purchases.

If the £2.5 billion is excluded from the figures then the average investment price increases to around 72.2 pence a share which is about eight pence away from breakeven. This is before we even contemplate interest on funds used and the fact that billions upon billions of pounds in taxpayers money has also poured into the money markets, and has yet to be returned.

There is no doubt that all parties in the political arena will use a strategy of smoke and mirrors to their own advantage wherever possible. Headlines seem to grab the attention of UK voters and with the election literally only weeks away a headline today, even if corrected further down the line, can have a major impact either way.

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